Correlation Between Global X and IShares Global
Can any of the company-specific risk be diversified away by investing in both Global X and IShares Global at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Global X and IShares Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global X Thematic and iShares Global Utilities, you can compare the effects of market volatilities on Global X and IShares Global and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Global X with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global X and IShares Global.
Diversification Opportunities for Global X and IShares Global
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and IShares is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Global X Thematic and iShares Global Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Utilities and Global X is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Global X Thematic are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Utilities has no effect on the direction of Global X i.e., Global X and IShares Global go up and down completely randomly.
Pair Corralation between Global X and IShares Global
Given the investment horizon of 90 days Global X is expected to generate 1.17 times less return on investment than IShares Global. In addition to that, Global X is 1.39 times more volatile than iShares Global Utilities. It trades about 0.07 of its total potential returns per unit of risk. iShares Global Utilities is currently generating about 0.12 per unit of volatility. If you would invest 6,849 in iShares Global Utilities on August 30, 2024 and sell it today you would earn a total of 149.00 from holding iShares Global Utilities or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global X Thematic vs. iShares Global Utilities
Performance |
| Timeline |
| Global X Thematic |
| iShares Global Utilities |
Global X and IShares Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global X and IShares Global
The main advantage of trading using opposite Global X and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global X position performs unexpectedly, IShares Global can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Global will offset losses from the drop in IShares Global's long position.The idea behind Global X Thematic and iShares Global Utilities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Industrials | IShares Global vs. iShares Global Consumer | IShares Global vs. iShares Global Materials |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |